House OK’s bill condoning penalties on unpaid employers’ remittances

Written by Fernan Marasigan / Reporter

Tuesday, 10 March 2009 21:01

THE House of Representatives has approved on third reading a bill granting Social Security System a one-time authority to condone the penalties slapped on unpaid employers’ remittances. Immediately, Liberal Party Rep. Lorenzo Tañada III of Quezon hailed the passage of House Bill 5922, which he described as a triple mini stimulus package, because it provides a strong incentive for companies in arrears on their principal payments for their employees’ contributions to immediately settle what is due and overdue. This reduces the huge burden of dealing with the delinquency penalties that have been slapped on them, said Tañada, one of the authors of the bill. Tanada said the 3-percent penalty for each month is indeed burdensome; and once a company goes into arrears and this is not quickly addressed, such can really pile up. “This measure is a stimulus package for these troubled companies that, by and large, do not want to be delinquent in the first place, but because of the series of crises that hit the country, failed to remit what is due as the employers’ share for their employees’ contributions to the SSS,” Tañada said. By providing this breathing space for troubled companies, “we are actually helping the SSS to immediately collect about P57 billion of the P95- billion overdue principal payments which would otherwise be difficult to collect,” he added He said many troubled companies choose not to pay what the SSS demands of them because the penalties that have accumulated are actually bigger than the principal they should have paid. Of the P325.5 billion that is collectible by the SSS as of May 31, 2008, penalties account for P230.82 billion, and only P94.6 billion is accounted for by the principal payments due. Past SSS condonation experiences show that, on average, 60 percent of those which have accumulated principal payments chose to settle what is due in outright cash. Sixty percent of P94.6 billion is P57 billion, which could easily beef up the SSS’s coffers—effectively becoming a stimulus package for the SSS. Tañada said this is the most important and urgently needed stimulus package directed at ordinary, privately employed individuals. “With collected and settled principal payments for the SSS members’ contributions, they can now avail themselves of the privileges of an SSS member in good standing—claim benefits and get loans—benefits that would otherwise not be available had their principal payments remained unsettled,” he said. Tañada, who chaired the technical working group of the Committee on Government Enterprises that prepared the draft substitute bill, said the TWG was quite conscious about finding a middle ground so as to help companies unable to settle obligations with the SSS, without sacrificing SSS’s financial viability and actuarial life. “We were also quite conscious that we do not unduly reward those who have been remiss in their obligations to the disadvantage of companies who have been very diligent in making timely payments to the SSS. Those who have been remiss with their contributions would still have to pay penalties, but not as huge as what the SSS charges them. The bill provides a sliding scale of condonation depending on the mode of settling the overdue SSS contributions,” Tañada said. “Those who choose to settle the principal payments even before this bill is passed into law will only pay 1 percent of the penalties being charged by the SSS. Those who choose to settle with outright cash payment the principal that is due to the SSS after this is passed into law will have to pay 5 percent of the penalties being charged them. Finally, those who choose to pay the principal on installment basis will have to still pay 15 percent of the penalties that is due,” he added.